Sigma Designs (SIGM) Announces Major Restructuring
Sigma Designs, Inc.® (NASDAQ: SIGM), a leading provider of intelligent system-on-chip (SoC) solutions for Connected Smart TV Platforms and Internet of Things (IoT) Devices, today announced restructuring activities intended to refocus its operating expenses and accelerate the return to profitability. These actions, which will focus on streamlining the Company’s Connected Smart TV Platforms business will commence in the second half of October 2017 and are expected to be fully implemented by the end of the fourth quarter of fiscal year 2018, ending February 3, 2018. Sigma currently estimates that these actions will result in lowering quarterly non-GAAP operating expenses from approximately $26 million in the second quarter of fiscal 2018, ended July 29, 2017, to an approximate $17 million to $18 million starting in fiscal year 2019. The Company anticipates these activities will reduce annual fiscal year 2019 non-GAAP operating expenses by approximately $34 million from expected fiscal year 2018 levels.
Management Comment “As part of our business review, we have decided that in the near-term, the most prudent action is to significantly reduce expenses,” said Thinh Tran, President and CEO of Sigma Designs, Inc. “This will not only bring expenses in line with our current revenue levels, but we believe it will also improve our ability to pursue other strategic alternatives. I recognize this will be a difficult transition period for the Sigma team. However, I am confident these actions will deliver the improved financial performance that our shareholders expect while continuing to support our existing major customers."
Restructuring Plan Activities Include:Restructuring will result in, among other things, reducing headcount of between 200 to 250 positions worldwide and the consolidation of certain facilities.
The Company expects to incur total one-time charges for severance and lease termination of approximately $8 million to $10 million over the third and fourth quarters in the current fiscal year. The Company expects all other restructuring and restructuring-related charges to be between $5 million to $7 million, which includes estimated asset impairment charges and other costs.
In addition, the Company is continuing with its strategic alternatives review process.
Sigma Designs does not plan to hold a conference call in association with the information in this news release. The Company will provide an update on these actions when it determines that further disclosures are appropriate.